Financial Assistance for Setting Up of Cold Storage

What is PIPDIC's cold storage assistance scheme?

Financial Assistance for Setting Up of Cold Storage is one of the specific schemes of the Pondicherry Industrial Promotion Development and Investment Corporation Limited (PIPDIC), the Government of Puducherry undertaking set up in 1974 to promote the union territory's industrial development and to finance its entrepreneurs. PIPDIC has an authorised share capital of Rs 45 crore, of which the Government of Puducherry has contributed Rs 31.64 crore.

According to PIPDIC's published schemes of assistance:

• Eligible borrowers: all proprietary and partnership concerns, public and private limited companies, co-operative societies, market committees, boards and agro industries corporations.
• Purpose: for setting up cold storage facilities.
• Loan limit: Rs 250 lakh, that is Rs 2.5 crore.
• Repayment: 8 years including a moratorium period of 2 years.

Two design features distinguish this from PIPDIC's ordinary industrial lending. First, the breadth of eligible borrowers, the list deliberately reaches beyond private industry to co-operative societies, market committees, boards and agro industries corporations, which is how post-harvest infrastructure is typically owned and operated. Second, the two-year moratorium within an eight-year term, which is longer than PIPDIC allows under most of its other schemes and reflects how long a cold storage takes to build, commission and fill.

Puducherry's agricultural and coastal economy gives the scheme its purpose. Vegetables, fruit, fish and processed food lose value fast without cold chain, and a union territory with limited storage capacity exports raw produce cheaply and buys it back expensive. A cold storage financed here is infrastructure for that gap.

Who is eligible for cold storage assistance?

You can apply if you are any of the six named forms of applicant:

• A proprietary concern
• A partnership concern
• A public limited company or a private limited company
• A co-operative society
• A market committee
• A board or an agro industries corporation

Beyond form, the practical requirements are those PIPDIC applies to any term loan of this size:

• The project is located in the Union Territory of Puducherry, Puducherry, Karaikal, Mahe or Yanam.
• The applicant has clear title or a valid lease to the site, free from encumbrance.
• The applicant can bring the promoter's contribution and offer acceptable security.
• The project is technically and commercially viable, supported by a detailed project report and a market study.
• The applicant is not in default to PIPDIC, another institution or a bank.

You cannot apply, or are not eligible, if:

• Your project cost requires more than Rs 250 lakh of borrowing under this head. Larger projects should be discussed with PIPDIC against the general Scheme for SSI / MSI Sector, which lends up to Rs 1,000 lakh.
• Your project is outside the Union Territory of Puducherry.
• You are seeking a personal loan or finance for something other than a cold storage facility. This is project finance for infrastructure.
• You are an individual with no entity, site or project. A cold storage proposal begins with land, capacity and a market, not with an application form.
• You are an existing defaulter to any institution or bank.
• You want only working capital for a running cold storage. That is a different requirement; ask PIPDIC about its Single Window Scheme, where the total project outlay including working capital must not exceed Rs 200 lakh, or its Short Term Financial Assistance to Good Borrowers, from Rs 5 lakh to Rs 50 lakh.

What are the terms, and what does the moratorium mean?

• Loan limit: Rs 250 lakh
• Repayment: 8 years including a moratorium of 2 years

The word "including" is doing real work. An eight-year schedule with a two-year moratorium leaves six years of principal instalments, not eight. Model the repayment on that basis.

The moratorium exists because a cold storage's cash flow curve is unusual:

An applicant who plans on the assumption that revenue starts in month one will produce projections PIPDIC's appraisal will not accept. Build the ramp in.

Compare where this sits among PIPDIC's other terms:

What documents are required?

How to apply for cold storage assistance

1. Secure the site first. A cold storage proposal without land is not appraisable. Obtain the sale deed, lease deed or PIPDIC industrial estate allotment, and the encumbrance certificate.
2. Fix the capacity and commodity mix. Decide the storage capacity in metric tonnes, the number and temperature regime of chambers, and the commodities — vegetables, fruit, fish, processed foods; each of which implies a different temperature, humidity and handling requirement.
3. Get the two big estimates. A civil works estimate from a qualified engineer for the insulated structure, flooring, docks and ancillaries; and quotations for the refrigeration plant covering compressors, condensers, evaporators, insulation, controls and standby power.
4. Resolve power. Cold storages run continuously and fail expensively when power does. Obtain the connected load feasibility from the electricity department and price the standby generation into the project.
5. Prepare the market study. Name the commodities, their seasonal cycles in and around Puducherry, the expected occupancy percentage by season, and the storage tariff. These three numbers drive the repayment projections more than anything else in the report.
6. Build the detailed project report with cost of project, means of finance including the promoter's contribution, and year-by-year projections that reflect the two-year ramp.
7. Register as a customer on pipdic.in, open Loan Applications, and file on the above-Rs-25-lakh form, uploading the project report, constitution documents, land papers, estimates, quotations, power documents, market study and KYC.
8. Submit and note the reference, or file physically at the PIPDIC registered office, 60 Romain Rolland Street, Puducherry 605 001.
9. Attend the technical appraisal and site inspection. Expect detailed questions on capacity utilisation assumptions and on power.
10. Accept the sanction, complete documentation, create the security and draw against construction milestones, then plan for instalments beginning after the 2-year moratorium.

Applicants outside Puducherry city can use PIPDIC's regional offices: Karaikal on 04368-292317, Thattanchavady on 0413-2271206, an office on 0413-2678105, Mahe on 0490-2332560 and 2332720, and Yanam on 08863-2321243.

How do I check my application status?

1. Log in to your customer account on pipdic.in, from which the application was filed.
2. Call the PIPDIC registered office on 0413-2335116 or email info@pipdic.com with your application reference.
3. Use the enquiry form on pipdic.in for pre-sanction questions and the separate grievance form for complaints.
4. Follow up at the regional office covering the project site during the inspection and documentation stages.

Why applications get rejected, and how to fix them

• Optimistic occupancy assumptions. The most common weakness in cold storage proposals. Projecting 90 per cent occupancy from year one will not survive appraisal. Model realistic seasonal occupancy and show the off-season plan.
• Power not addressed. A proposal with no connected-load feasibility and no standby generation is incomplete. Cold storage failure destroys stored goods and creates liability; PIPDIC's appraisal treats this seriously.
• No committed commodity base. Show letters of intent, farmer or trader tie-ups, or existing relationships. A storage with no identified users is a speculative building.
• Encumbered or unclear land title. Obtain the encumbrance certificate early and resolve any charge before applying.
• Civil and machinery costs not separately estimated. A lump-sum project cost cannot be appraised. Separate land, civil works, plant and machinery, and other costs.
• Insufficient promoter's contribution. PIPDIC lends against a project with meaningful own equity. Arrange it before applying.
• Repayment modelled over eight years instead of six. The moratorium is inside the eight years. Recalculate.
• Existing default. Clear defaults to any lender first.

What are the key dates?

PIPDIC accepts loan applications on a rolling basis and publishes no last date for this scheme. PIPDIC and the Government of Puducherry both run a financial year from 1 April to 31 March, when interest rates and scheme parameters are ordinarily reviewed.

The decisive dates for a cold storage borrower are project dates. Construction should be timed so that commissioning lands before the main intake season for the commodities the storage will hold, not after it. A facility commissioned just after a season sits empty for a full cycle while the moratorium clock runs. The other date to mark is the end of the two-year moratorium, when principal instalments begin and the remaining six years of the schedule start.

How do I raise a grievance?

1. Use the grievance form on pipdic.in, maintained separately from the general enquiry form.
2. Contact the PIPDIC registered office, 60 Romain Rolland Street, Puducherry 605 001, on 0413-2335116, fax 0413-2336842, or email info@pipdic.com.
3. Escalate to the Director of Industries and Commerce, Industrial Estate, Thattanchavady, Puducherry 605 009, on +91-413-2248476, +91-413-2248168 or +91-413-2248320.
4. The departmental head is the Secretary to Government (Industries and Commerce), Chief Secretariat, Puducherry 605 001, on +91-413-2336115.

PIPDIC charges its published processing and service charges only. No agent or intermediary is authorised to collect money on a promise of arranging a sanction for a cold storage project.